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THE DIGITAL ADVANTAGE: HOW DIGITAL LEADERS OUTPERFORM THEIR PEERS IN EVERY INDUSTRY …

THE DIGITAL ADVANTAGE: HOW DIGITAL LEADERS OUTPERFORM THEIR PEERS IN EVERY INDUSTRY

By Didier Bonnet, Managing Director and Global Practice Leader, Capgemini Consulting

More in: Technology , Business
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  • 1. THE DIGITAL ADVANTAGE HOW DIGITAL LEADERS OUTPERFORM THEIR PEERS IN EVERY INDUSTRY Transform to the power of digital
  • 2. Copyright © 2012 MIT CDB and Capgemini Consulting What is digital maturity? Digital Intensity Transformation Management Intensity Technology-enabled initiatives in: • Customer Experience • Internal Operations Leadership capabilities including: • Vision • Governance • Engagement • IT-Business Relationships
  • 3. Copyright © 2012 MIT CDB and Capgemini Consulting Four levels of digital maturity 3 Digitalintensity Transformation management intensity CONSERVATIVES •Overarching digital vision exists, but may be underdeveloped •Few advanced digital features, but traditional capabilities may be •Strong governance across silos •Taking active steps to build digital skills and culture BEGINNERS •Management skeptical of the business value of advanced digital technologies •May be carrying out some experiments •Immature digital culture FASHIONISTAS •Many advanced digital features (such as social, mobile) in silos •No overarching vision •Underdeveloped coordination •Digital culture may exist in silos DIGIRATI •Strong overarching digital vision •Good governance •Many digital initiatives generating business value in measurable ways •Strong digital culture
  • 4. Copyright © 2012 MIT CDB and Capgemini Consulting Mastering both dimensions is the key to achieve the digital advantage 4 Social Media Digital Product Design Customized Manufacturing Digital Division: Nike Digital Sport 1 2 DIGITAL INTENSITY TRANSFORMATION MANAGEMENT INTENSITY  Digital marketing  Digital product innovation/design  Digital commerce (e/m-commerce)  Digital technologies (GPS, mobile, etc.)  Customer analytics FIRM-LEVEL TRANSFORMATION+
  • 5. Copyright © 2012 MIT CDB and Capgemini Consulting DIGIRATI CONSERVATIVES FASHIONISTAS BEGINNERS Digital maturity varies widely* 5 * Digital maturity of 391 companies in our sample
  • 6. Copyright © 2012 MIT CDB and Capgemini Consulting 6 +6% +9% -4% -10% Basket of indicators: • Revenue / Employee • Fixed Asset Turnover Revenue Generation Efficiency -11% +26% -24% +9% Basket of indicators: • EBIT Margin • Net Profit Margin Profitability -12% +12% -7% +7% Basket of indicators: • Tobin’s Q Ratio • Price / book ratio Market Valuation Digitally-mature companies have significantly better financial performance* Revenue generation, profitability and market valuation * Average performance difference for firms in each quadrant versus the average performance of all large firms in the same industry for the 184 publicly-traded companies in our sample
  • 7. Copyright © 2012 MIT CDB and Capgemini Consulting Some industries are more mature than others… 7 Banking Consumer Packaged Goods Insurance Manufacturing Pharmaceuticals Retail High Technology Telecoms Travel and hospitality Utilities Average industry maturity:
  • 8. Copyright © 2012 MIT CDB and Capgemini Consulting …but every industry already has digirati Percentage of firms in each industry by quadrant: 8
  • 9. Copyright © 2012 MIT CDB and Capgemini Consulting Innovation challenges Digital Service Unit Digirati have a common Digital DNA They invest in 100% of the Transformation Management elements… Vision IT/ Business Governance Engagement • Transformative Vision • Shared Vision • Digital Tsar • Digital Units • Investment Committees • Promoting Change • Employee Participation • Investing in Skills • Shared understanding between IT and business executives on role of IT 9 Chief Digital Officer at Starbucks Digital Year “The IT Team (...) now work hand in hand with the Creative Media team.” “Boeing believes that the future of the aviation industry lies in the ‘digital airline’. To succeed in the marketplace, airlines and their engineering and IT teams must take advantage of the increasing amount of data coming off airplanes, using advanced analytics and airplane technology to take operational efficiency to the next level.”
  • 10. Copyright © 2012 MIT CDB and Capgemini Consulting 10 Digirati have a common Digital DNA …and they make strategic decisions on where to excel digitally Focus Investments on Where they Choose to Excel Digitally Combine Digital Capabilities to Exploit Synergies + Customer Experience Social media Mobile channel In-store Online Unified Processes/ Integrated Data Process Excellence Supply-chain Integration Centralized Ordering New business models Customer experience Unified Processes/ Integrated Data Analytics capabilities Personalized Customer experience Unified Processes/ Integrated Data On-premise Online BURBERRY ASIAN PAINTS CAESARS ENTERTAINMENT
  • 11. Copyright © 2012 MIT CDB and Capgemini Consulting How to drive digital transformation Frame the Digital Challenge •Understand the Impact •Assess Digital Maturity •Develop Vision & Align Around It Focus Investments •Build a Digital Roadmap •Build Investment Case •Set up Governance Model Sustain the Transformation •Build Capabilities •Align Incentives & Rewards •Measure, Monitor & Iterate Frame Focus Sustain Engage Engage the Organization •Signal the Change •Mobilize at Scale •Evolve Culture & Adapt Work Practices 11
  • 12. DIGITAL MATURITY MATTERS IT MATTERS IN EVERY INDUSTRY ANY COMPANY CAN BUILD DIGITAL DNA TAKE ACTION NOW TO CREATE YOUR OWN DIGITAL ADVANTAGE Copyright © 2012 MIT CDB and Capgemini Consulting